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Public Money and Private Rights At Odds in NC’s Mental Health System

With money for mental health services originating from, and passing through, so many hands, consumers, their families, advocates, as well as local mental health agencies and state officials are all asking who, exactly, sets the rules.

Third in a five part series on changes in North Carolina’s mental health system.

By Lydia Wilson

Last summer, North Carolina legislators set the state’s mental health system on a new course, they set state and local officials, mental health providers, and program administrators scrambling to get changes in place, and set a grueling schedule to get it all done.

All the while, basic questions remain unanswered: Who ultimately decides how much care consumers get? What privacy rights do publicly funded agencies have? Who’s left holding the bag if it all fails? Questions about governance of the state’s new mental health agencies remain unanswered, even as some of those agencies are already open for business.

And lawsuits are well under way.

Some of the sharpest questions have come from advocate Vicki Smith, director of the non-profit Disability Rights NC. Since 2007, she has been listening to stories of consumers served by Piedmont Behavioral Health (PBH), especially those with intellectual and developmental disabilities, who say the services they need to thrive have been denied.

”In the managed care model,” said Smith, “once a consumer is stabilized, you start withdrawing support. You can destabilize the individual, and that is what is happening with many of our clients.” She has expressed concern that this can create a cycle of hospitalization, stabilization, deterioration and repeat hospitalization for consumers.

In February 2010, Disability Rights filed a lawsuit, arguing that the low rate PBH paid for some services would force so many providers to quit, consumers with intellectual and developmental disabilities would have to leave home and live in institutions.

The U.S. Attorney General weighed in In response to the Disability Rights complaint, saying the charges were “of interest” to the federal government. If the allegations were true, he said, the state of North Carolina would be in violation of the Americans with Disabilities Act for not providing care in the least institutional setting possible.

That lawsuit is still pending.

The stakes are high

As a managed care organization, PBH regularly reviews consumers’ service needs based on their health and sets a budget for their treatment. In a recent review of consumers with intellectual or developmental disabilities, covered by PBH’s “Innovations” waiver, the agency cut one consumer’s budget by more than $25,000 from one year to the next, even though Disability Rights argued that person’s condition was essentially unchanged.

Multiple lawsuits seek to clarify practices in the new system.

PBH said it has to make hard decisions so that it can be fair to the whole Medicaid population. In a July 2011 statement, PBH said, “at this time, approximately 25 percent of individuals served are receiving more services than they need and 75 percent are receiving the appropriate amount or fewer services than they need.”

Disability Rights said that when PBH made those hard decisions, it did not adequately explain to consumers how those decisions were made and how to appeal them. Disability Rights argued the U.S. Constitution requires adequate notice of government decisions and a hearing to appeal a decision before a neutral judge.

The organization filed a lawsuit on behalf of four consumers served by PBH in July 2011. A judge agreed those four plaintiffs were representative of a larger class of people with developmental and intellectual disabilities. The suit alleges PBH cut consumers’ services without the due process guaranteed in the Constitution.

But in PBH’s court filings, the agency argued because the waiver is “an alternative to the Medicaid entitlement,” the usual rules don’t apply.

“Because the Innovations program is an optional program, and not an entitlement, Innovations enrollees do not have Constitutional due process rights with respect to the program,” the agency argued.

“That is dead wrong,” said John Rittelmeyer, director of litigation for Disability Rights. “Once a state does provide a waiver, it is required to provide (the waiver) in accordance with the Medicaid Act.”

Rittelmeyer also argued that disabled consumers with Medicaid cannot opt out of the Innovations program, if they need that Medicaid to survive.

On March 29, 2012, a federal judge agreed with Disability Rights that the state was letting PBH cut consumers’ services without proper appeal.

In an expedited temporary decision, Federal judge Louise Flanagan wrote just because it’s expensive doesn’t mean PBH, or the state, can shortcut a constitutional appeals process.

“Fiscal concerns cannot be held to outweigh harm to plaintiffs’ safety, health, and well-being,” wrote Flanagan.

PBH is appealing the decision.

Until a final decision is reached through a full trial, PBH was required to restore services to 130 consumers, and PBH officials said they did so immediately.

“Who are we competing against?”

The appeals process is one bullet point on a long list of rules that some lawmakers, advocates, and staff from Local Management Entities (now known as LME-MCOs) have been chewing over in Raleigh every month during 2012. Statutes that govern LME-MCO operations have not been updated since they were written in 1985.

Rep. Nelson Dollar leads a General Assembly subcommittee on how LME-MCOs should be organized and governed.

The discussion has routinely gotten sticky around big questions, such as how involved counties that infuse money into agencies’ budgets should be in overseeing how agencies providing care to their citizens, and whether LME-MCOs should be able to independently take out a bank loan.

“It seems like this is getting kind of big and amoebic,” said an advocate on the legislative subcommittee, Laurie Coker, of NC Consumer Advocacy, Networking and Support Organization. “Who is ultimately accountable for this system?”

According to DHHS officials, the state is ultimately responsible because of its contracts with the federal government to manage Medicaid.

So if an LME-MCO fails, the state picks up the pieces.

Nonetheless, committee members continue to debate over who will oversee LME-MCOs as they manage state and federal Medicaid money – and how – in the monthly subcommittee meetings.

One recommendation at the April 2012 meeting got a lot of attention: to grant LME-MCOs the ability to protect “intellectual property and other competitive health care information.”

That intellectual property would include things like the software and business documents PBH developed using state and federal dollars. PBH wants a change in the law that would also allow the agency to withhold some information from public records requests. Agency leaders have argued these should be proprietary materials, protected from competitors.

“Who are we competing against?” asked Coker.”

How much information could be shielded by a change in the law is unclear, and that ambiguity concerns disability and First Amendment advocates alike.

An attorney with the UNC Chapel Hill School of Government, Mark Botts, asked how PBH was currently being hindered or restrained by transparency requirements. “If someone can articulate that, it’s easier to set a limit,” he said.

Mark Botts, UNC School of Government

No one in the meeting responded to Botts’ question.

Public hospital authorities in North Carolina already enjoy the ability to exempt competitive health information from public records requests. PBH CEO Pamela Shipman argued her agency deserves similar treatment, saying it would protect “a narrow range of information surrounding business concerns…should the day come when we’re bidding against private managed care organizations for business in the state.”

“Sign this piece of paper, or else”

But the prospect of keeping the public out of LME-MCO documents strikes a nerve among some long-time staff and consumer advocates. And for nine months, stakeholders have been embroiled in a debate with PBH and the state about public records.

When they passed the newest reforms, state legislators instructed other state agencies to model themselves on PBH’s example. So, just after the General Assembly approved the Medicaid waivers, PBH attorneys asked staff at other public agencies to sign non-disclosure agreements around materials PBH had provided to them in order to comply with the law. The contracts made LME-MCO staff financially responsible if they, or anyone they hired, released PBH’s “Proprietary Information.”

“That letter conjured up a scene for me from a mob movie,where the hit man was holding a gun to someone’s head and saying sign this piece of paper or else.” – Mark Botts, UNC-CH School of Government That proprietary information, according to the agreement, is anything PBH developed that “has value in its business,” including “know-how, techniques, processes, plans, ideas, [and] documents.”

PBH CEO Pamela Shipman claimed her agency wrote the non-disclosure agreements because consultants approached her, offering to resell the PBH business model for profit. She said she didn’t want her agency — or any other — to do that.

“There are private companies hovering around the state like vultures who would like to come in and run the waiver model for North Carolina,” admitted Mark Botts, from the UNC-CH School of Government.

But people around the state have cried foul, arguing that a public agency shouldn’t bind another with a contract to not share information developed with tax dollars. The board at Western Highlands Network was so concerned, it voted not to sign the non-disclosure agreement.

Then Mike Watson, Deputy Secretary for NC DHHS, sent a letter to Western Highlands Network, after he received word of the board vote.

“Western Highlands Network has made decisions that put in jeopardy the success of the waiver implementation process,”wrote Watson.”… signing the PBH agreement will signal your willingness to restart the waiver implementation process with the Department,” Watson wrote.

The letter raised a lot of hackles.

“That letter conjured up a scene for me from a mob movie,” said UNC-CH School of Government’s Botts, “where the hit man was holding a gun to someone’s head and saying sign this piece of paper or else.”

Eventually, Western Highlands board members signed. A member of the agency’s Consumer and Family Advisory Committee resigned over the issue.

When the non-disclosure agreement was brought up for the fourth month in a row at the Raleigh subcommittee meetings, PBH head Pam Shipman sighed apologetically.

“I almost wish we’d never done it,” she said, slumping in her chair.

Public dollars, private rights?

Another legal scholar, David S. Levine from Elon University, said he’s not unsympathetic to PBH’s desire to protect its intellectual property. He sees broader national context for PBH’s actions.

His research shows that other state and local governments have also tried to protect their revenue-generating processes, saying they are “trade secrets” protected by exemptions in the public records law. And in some states, they win those arguments.

Levine says there is “very little case law” on this issue in North Carolina.

In a 2011 article for the Michigan Telecommunications and Technology Law Review, Levine wrote the appeal is that governments want to maximize revenues and reduce costs, which could benefit the people.

“But, is it worth the price paid in muddling trade secrecy law and obscuring the operations of government in a time where cynicism toward, and suspicion of, government is widespread and getting worse?” Levine asked.

Thus far, PBH is not known to have denied anyone access to its records on grounds that they contain trade secrets.
If they ever do, the claim might end up as the subject of yet another lawsuit against the agency. North Carolina statute says trade secrets must be owned by a “private ‘person.’”

But advocates, consumers, and their family members would rather not have to sue repeatedly. They say they shouldn’t have to resort to hiring attorneys to know the decisions the LME-MCOs are making, and why.